Which of the following is NOT classified as a Direct Cost?

Dividends received is classified as an income item unrelated to the direct costs of producing goods or services. Direct costs are expenses that can be directly attributed to the production of specific goods or services, such as shop wages and delivery expenses, which are incurred in the production or sale process. Freight out, which refers to transportation costs associated with delivering goods to customers, is also categorized as a direct cost because it is directly linked to sales activities.

In contrast, dividends received arise from investments in other companies and do not relate to direct production costs. They represent a return on investment rather than a cost incurred in the efforts of producing or selling goods or services. Hence, identifying dividends received as something not classified as a direct cost is accurate and reflects the broader understanding of how costs are categorized in accounting.